Temporary or Permanent? What You Need to Know About Recent Tax Reform

This year, the IRS and Congress have unveiled tax reform, some of which is permanent, and some is temporary. Decisions you make this year could affect what happens when some of the reforms expire in 2025. Take a look at the below guide to help you and your tax consultant plan for Tax Day 2018.

2018 Permanent Tax Reform Provisions for Individuals

All of the changes listed below take effect for the 2018 tax year (unless otherwise noted) and are not scheduled to expire in 2025:

Alimony

No deductions for alimony payments are required by post-2019 divorce agreements.

Roth IRA conversions

Starting this year, there will no longer be reversals of Roth IRA conversions.

Affordable Care Act

Starting in January 2019, you won’t have to worry about paying a penalty for failing to have “minimum essential coverage” under the ACA.

529 distributions

You can now take tax-free distributions of up to $10,000 out of your 529 account to cover qualified K-12 school expenses at public, private and religious schools.

Gifts to colleges

You can no longer write off charitable gifts to colleges if your gift allows you to purchase tickets to athletic events at the school.

2018 Permanent Tax Reform Provisions for Businesses

Corporate income tax

There’s now a flat 21 percent income tax on corporations.

Corporate alternative minimum tax

This tax has now been eliminated for good.

Section 179

The rules for first-year Section 179 depreciation write-offs are permanently more generous.

Fleet expenses

The federal government is offering more generous depreciation deductions for business fleets of cars, light trucks and light vans.

Property and farming equipment depreciation

Your property, farming machinery and equipment will now depreciate at faster rates.

Cash-method accounting

The eligibility requirements to use cash-method accounting and simplified inventory accounting procedures has been generously expanded.